Log in/Register

Please log in or register to continue. Registration is free and requires only your email address.

Log in

Register

Emailrequired

PasswordrequiredRemember me?

Please enter your email address and click on the reset-password button. You'll receive an email shortly with a link to create a new password. If you have trouble finding this email, please check your spam folder.

Joseph E. Stiglitz, recipient of the Nobel Memorial Prize in Economic Sciences in 2001 and the John Bates Clark Medal in 1979, is University Professor at Columbia University, Co-Chair of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD, and Chief Economist of the Roosevelt Institute. A former senior vice president and chief economist of the World Bank and chair of the US president’s Council of Economic Advisers under Bill Clinton, in 2000 he founded the Initiative for Policy Dialogue, a think tank on international development based at Columbia University. His most recent book is Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump.

Completely agree in this paragraph, the main problem is the German rigid way of thinking, they're obsessed with inflation since the '20 decade hyperinflation and force the ECB to act only as 'low inflation keeper'. They're openly ignoring that the monetary policy (expansive) is a powerful tool to kick-up a depressed economy. Of course is a short term measure but is the most effective one in capitalist economies.

MD Trager,
USA, Rule of Law. Not the answer to Peoples who will
not to follow it and adjust it over Time.
Notes: under a new system/ conditions require honesty/
Value exchange to exist/need for money demanded by
creditors/it is not about money/unbridled power of
wealth/YES-means un-liveable State/NO is option
to a more democratic Nation/
The use and power of money in the amounts, which exist, will lead to more of the same problems. The
Problem is the demographics are now at a scale
in which the Globe will be affected, if it can't be
checked.
Each action we take on a personal level is the answer
to many questions, which are outside of ourselves.
MD Trager
Corvallis Oregon
USA

Exactly; The EU is about power, and most definitely about non respect of national democracies. These are conflated with nationalism, and any political movement which opposes the politically inspired austerity imposed on southern Europe as "populists".

Its time to put the finger on the spot!
Greece is nothing more than a convenient 'innovative' way to turn private debt into official (after decades of banks -like Deutsche Bank- and other financial institutions speculation through toxic products).
This is achieved by a very clever way of putting the blame on a nation thus losing focus of who the real culprit is and who should really have been paid for this speculation.
How much is globe total debt?
Is there any country without debt?
Who sets the criteria over which level of debt is acceptable and who is benefited from this setting?
Are this criteria followed by everybody?
Why nations with trillion of debts and decreasing productivity are not in the spot?
Why nations with over 90% of debt have access to the markets?
And last but not least, why 'Greek' debt is not examined under IPSAS?
Well maybe it's not about stupidity, mistakes or power
Its just another way of speculation over nations ...

«Greece might finally be able to get assistance from the World Bank»
Did he meant the AIIB? The Asian Infrastructure Investment Bank? The OXI vote doesnt out Greece of the €uro but it leads to an even more make it or break situation for EU less forget the UK referedum

Greece with this referendum might grasp its destiny in its own hands will happen not by leaving the €uro and STIGLITZ knows it

Hi Mr Stiglitz,
I recently read your book "Globalization and its Discontents",where you argued about the failed policies and actions of the IMF.So my question is does the IMF play any major role in the birth of its crisis or in the exacerbation of its crisis.(Other than of course being one of the major creditors).

Dear Professor Stiglitz,
could you please use your worldwide reputation in order to advice the greek government to introduce a debt-free, national compleentary currency, parallel to the Euro!
With best regards,
Joseph Meyer

Perhaps the Greeks would have been better off defaulting on their bonds at the outset, and then negotiating their new value in exchange for "austerity" policies. By the latter, I mean that government pensioners and employees should get a haircut on their compensation. The Greek tax system should be modified to lower taxes, rationalize them and make them more collectible. In other words, let's try a market-based approach. Treat taxes like any other price - one designed to maximize revenues rather than some wishful thinking, static accounting based approach. Those who are living off of the taxpayer should not have outsized compensation packages, including pensions. Individuals should have to work longer, in line with their physical and mental capacity and life expectancy, not some cushy deal where you point in your time and look forward to having someone else pay for you to enjoy a long remaining life 0f leisure.

Prof. today Mr. Tsipras having sacked his erratic to say the least Minister of Finance has at last seen the light. The NO vote has won yesterday but the YES voters are happy today because Mr. Tsipras is fast moving towards resuming negotiations on a platform that nobody will disagree. So no rupture no GREXIT at least with his initiative. Will it be too little too late? I do not know! But wait and see the reactions.

The Greek referendum shows that if the people were allowed to express their opinions more often we would have a very different world than what we have today. No doubt the Troika feared it. What is happening is amazing and I hope Portugal and Spain follow up on this surging movement, forcing Europe to radically re-think itself.

To call for a plebiscite with a very short notice, in a caotic and highly emotional environment, and on a eat-the-cake-and-have-it-too basis (keep the euro, get more money from Europe and stop austerity), is a kind of democracy that Hitler and Mussolini would have liked it (Stiglitz should know that both of them called more than one plebiscite on similar bases). And what's about the democratic will of the peoples of other 18 Eurozone countries who freely elected governments that were daily insulted by Tsipras and his friends? Furthermore, Stiglitz should know that, without Europe's intervention and money, the sudden stop and reversal of private capital, which put an end to the giantic bubble that had permitted to Greece to spend for a decade up to 20% more than its GDP, would have produced an even more violent drop in Greek living standards. Stiglitz should also know that, without drastic increases in productivity and falls in costs (still much higher than in neighboring countries like Turkey or Bulgaria), no debt relief would be sufficient for Greece to resume sustainable growth. And this is exactly the opposite of the increases in wages and public expenditures (financed with other European tax payers' money) that Tsipras & promised to his constituency. But Stiglitz has no time to devote to these minutiae: he's too busy to appease the global audience of the multi-millionaire circuit in which he's starring.

The analysis of the German ifo institute shows that "only" one third of debt service has gone to pay out private-sector creditors.
Mr. Stiglitz serves a myth that seems to be a "logic" gut feeling but is in fact just not ture.

Mr. Stiglitz is a supporter of the left wing extremists (and right wing extremist friends in parliament) of Greece and therefore his analysis is biased. One can not blame unilaterally the EU! To blame everything on "austerity" on an economy like Greece is very unprofessional. There are sever problems within that country and there are many causes of the situation that we have now. But Mr. Stiglitz prefers to sit in his chair and blame everything unilateral on austerity.
There was never any austerity forced upon Greece. There are simple rules that the EU has established to join the Eurozone (which is not a transfer union!) and this rules were clear from the begining and they had to be set for such pact.
I was never a supporter of such monetary union without fiscal pact. But it won't help much to point over and over to the weakness of this union. We now have to work with what we've got. But to twist the facts like Mr. Stiglitz does won't help either.
One should understand that Greece is cut off from money markets since 2010 and that without support of the EU und IMF money Greeks would have lost 100% of rents, government wages etc. If the EU wound't give any rules about how the money is spent, the EU and IMF would have to finance 110% of the Greek budget!
The decline in GDP wasn't caused by the "austerity" of EU. GDP has collapsed because the entire Greek economy was addicted to government debt and money markets lost faith in Greece' credibility.
I belive that Mr. Stiglitz prefers a socialist country where everything is controlled by the government and its debt. Give the drug addict his drugs but don't try to change the way he lives and everything will be fine and Mr. Stiglitz will be satisfied.

What a relief to see that common sense still has a powerful voice.
Thank you Mr. Stiglitz, for continuing to take a stance against institutionalized madness, and for taking the democratic citizen's perspective. To my taste, you're still too modest in your apparent assumption that the troika essentially has our best interests at heart.

After the 1945 meltdown, the strongest were willing to bootstrap and pull the weakest upwards - to create what today exists as The West. The Anglosphere - above all America - was willing to 'pay any price' to enable Western Europe to rebuild. Germany and France were pulverized by the meltdown, but were able to recover.
The difference is that in the unending tragedy since 2008 - within a decade of Euro - the twin engine room of the European Union are unwilling to bootstrap and pull the weakest upwards. Either they are unable or unwilling - in either case, the net result is that the weakest are left to fend for themselves. The strength of The Union is not available to them. The strength of The Union is available to Scotland and Ukraine - who are willing to risk and embolden their departures from their existing arrangements. Such is the nature of The Union - it is a political animal created to cause problems everywhere else.
Greece has overwhelmingly exposed the intentions of The Twin Engine Room that runs The Union. It's economics is exposed - and it is not The Third World where Global Finance exposures are limited to a few millions. It is The First World with trillions at risk. Greece has made abundantly clear they do not wish to leave The Union - their weakness requires them to stay and this can reaffirmed in another referendum. But again, there is incessant noise that erupts every day in enforcing an exit.
An exit for Greece, an exit for Britain.
An entry for Scotland, an entry for Ukraine.
In redrawing Europe's maps, The Union is rekindling Europe's tribal troublesome past.
Politics must create the narrative for the future, not reignite rancour and revenge from history.

I tend to respect my doctor's view on cholesterol's damage and my mechanic's views on the best car lubricants, but when they start discussing soccer, I can feel comfortable telling them they are full of it.
Information asymmetry theory aside, Mr. Stiglitz's piece on the left (pun intended) is just a bunch of unsupported statements worthy of the worst populist snake oil salesman:
- Who is he to say that creditors do not need their money? He must surely have some shares, bonds or funds in his hard earned savings. How would he feel if his debtors told him he does not need his money?
- Greeks voted to end austerity. So? I would vote myself the lotto.
- Mr. Stiglitz does well not to advise Greek voters. Their vote will not change anything in the end. One way or the other, via austerity or via devaluation, they will be brought down to earth. You can get a free lunch, but only until the waiter realizes they are you do not intend to pay.
Now, why does an educated and clever person brandish rhetoric? My only answer is: because it benefits him somehow. I wonder whether it is prestige, the love of the Greeks (or the Argentine back when), or speaking engagements, but it couldn't be the love of truth (some call it philosophy).
Finally, the Professor hints (does not say) he would vote to live off other people's forgiveness or foolishness. Fine, but he must know his vote won't make it true.

It is quite clear that Professor Stiglitz has not compromised any of his powerful candour and nonconformist openness about macroeconomic issues of our time. As I’m writing this comment I 'm just seeing the latest news about Greece on my laptop screen saying:

“The scale of the No vote took European leaders by surprise, and led to panic in the financial markets. German Chancellor Angela Merkel spoke to Alexis Tsipras, the Greek prime minister, and is due to meet the French President, Francois Hollande”

One may recall the time when Ken Rogoff tried to characterize Stiglitz ideas as: “at best highly controversial, at worst, snake oil”. Well, the test of time proved that Stiglitz was absolutely right that time, and I’m afraid will be on-the-money this time again.

Last time it was financial authorities “conformism” that by trying to create a quasi-confidence, of the sort Rogoff implicitly was advocating in his 2002 open letter to Stiglitz, shaped the great financial crisis of 2008; and it was Mr. Greenspan of the notorious “committee to save the world”, who finally admitted the responsibility of adhering to unfettered capitalism, and confessed that the committee “had *not* it right” . It is still greatly profitable to reflect on Rogoff’s criticism of Stiglitz in that open letter:

“In your role as chief economist at the World Bank, you decided to become what you see as a heroic whistleblower, speaking out against macroeconomic policies adopted during the 1990s Asian crisis that you believed to be misguided. You were 100% sure of yourself, 100% sure that your policies were absolutely the right ones. In the middle of a global wave of speculative attacks, that you yourself labeled a crisis of confidence, you fueled the panic by undermining confidence in the very institutions you were working for. Did it ever occur to you for a moment that your actions might have hurt the poor and indigent people in Asia that you care about so deeply? Do you ever lose a night's sleep thinking that just maybe, Alan Greenspan, Larry Summers, Bob Rubin, and Stan Fischer had it right—and that your impulsive actions might have deepened the downturn or delayed—even for a day—the recovery we now see in Asia?”

… And it is important to recall what Stiglitz wrote in his very important article of April 17, 2000, in New Republic:

“I was often asked how smart--even brilliant--people could have created such bad policies. One reason is that these smart people were not using smart economics. Time and again, I was dismayed at how out-of-date--and how out-of-tune with reality--the models Washington economists employed were. For example, microeconomic phenomena such as bankruptcy and the fear of default were at the center of the East Asian crisis. But the macroeconomic models used to analyze these crises were not typically rooted in microfoundations, so they took no account of bankruptcy.

But bad economics was only a symptom of the real problem: secrecy. Smart people are more likely to do stupid things when they close themselves off from outside criticism and advice. If there's one thing I've learned in government, it's that openness is most essential in those realms where expertise seems to matter most. If the IMF and Treasury had invited greater scrutiny, their folly might have become much clearer, much earlier”

This is the crux of the issue now for Greek, for Portugal, for Spain, and surely also for Germany, China and the US. The world needs a right structure for the global trade, and to have a right structure we need a right model. However, as I’ve written before models are like city maps -- highly abstracted constructs to help the traveller to organise information and to get home safly. Like city maps any model, if you give it enough time, can take you home, but the question is how much time are you prepared to waste using an outdated map to find home? When one reads Stiglitz’ comments one can’t help to be very impressed with the richness of his sophisticated underlying general equilibrium model, which its intricacies unfortunately escape the less careful readers. It is, of course, impossible for him to present a fully-specified model in a short space of an article. Nevertheless, the clarity and consistency of his argument delineates a sharp sketch of his underlying model. In his open letter Rogoff accused Stiglitz of cloaking himself “in the mantle of John Maynard Keynes” and wrote:

“No, instead of Keynes, I would cloak your theories in the mantle of Arthur Laffer and other extreme expositors of 1980s Reagan-style supply-side economics. Laffer believed that if the government would only cut tax rates, people would work harder, and total government revenues would rise. The Stiglitz-Laffer theory of crisis management holds that countries need not worry about expanding deficits, as in so doing, they will increase their debt service capacity more than proportionately.”

Unfortunately, many politicians just follow this type of partial-equilibrium assertions and derive their misguided conclusions.

Perhaps if Rogoff thought of a model with both a fully articulated demand side and a complete supply side, he could see that it is possible to direct extra funds into the expansion of production possibility frontier, shifting the growth rate of potential output, and creating more debt service capacity. There are many ways to achieve such an objective within the framework of a capitalist regime –for instance by 3P (public-private- partnership) backed by a Brady kind of financial restructuring, and employing the possibilities of the global supply chains combining with the possibilities that the new advnces in information technology offer.

Instead we have the IMF formulation of its assistance program, which its Stiglitz’ characterization is spot on :

“When the IMF decides to assist a country, it dispatches a "mission" of economists. These economists frequently lack extensive experience in the country; they are more likely to have firsthand knowledge of its five-star hotels than of the villages that dot its countryside. They work hard, poring over numbers deep into the night. But their task is impossible. In a period of days or, at most, weeks, they are charged with developing a coherent program sensitive to the needs of the country. Needless to say, a little number-crunching rarely provides adequate insights into the development strategy for an entire nation. Even worse, the number-crunching isn't always that good. The mathematical models the IMF uses are frequently flawed or out-of-date. Critics accuse the institution of taking a cookie-cutter approach to economics, and they're right. Country teams have been known to compose draft reports before visiting. I heard stories of one unfortunate incident when team members copied large parts of the text for one country's report and transferred them wholesale to another. They might have gotten away with it, except the "search and replace" function on the word processor didn't work properly, leaving the original country's name in a few places. Oops”

Tsipras talks about ‘European solidarity’ –what about Greek solidarity? What has been the Greek citizens patriotic response to the fiscal crises the Hellenic Republic has faced for the past five years? Capital flight for one: Over 100 billion Euros has been taken out of the country by those with the wherewithal to invest in Greece to get the economy moving, very patriotic, no? Second the dire economic situation of the government has not resulted in any the reduction of endemic income tax evasion out of a sense of Greek patriotism (and let us not forget the Lagarde list which the then Greek finance minister stuck in his desk drawer, after removing the names of friends and relatives, for two years). Pray tell, exactly what is the nature of this ‘attack’ on Greek democracy? To my admittedly simple mind the Greeks ‘democratic expression’ being ‘attacked’ is that Greece has effectively voted to have the other 18 Euro zone countries continue to pay its bills, subsidize its bloated public sector payroll, fund its unaffordable generous early retirement schemes and make up for the taxes the Greek government is unable, and not particularly inclined to collect from its own citizens. Hello? Speaking of democracy: What would possibly be the outcome of referendums held in the other 18 Euro zone countries if they asked their taxpayers if they wished to continue to do so?

The result of the referendum was a 60% No vote which will have a global impact starting with financial markets. Portugal & Spain have general elections coming up and this result in the Greek referendum will effect these elections. The prudent course of action for central banks and governments would be to prepare for a bumpy ride ahead considering the fragility of the global economy.

The Greek people have spoken with a "No" vote in the referendum and this result will not only have an impact on the up coming general elections in Portugal and Spain, but a global impact. Considering the fragility of the global economy it would be prudent for central banks and government to prepare and plan for a bumpy ride ahead.

As for democracy voting might seem as a democrating thing to do but I tend to agree that the Greek government should already have rejected the proposal.
Now the voters are "responsible" of the outcome of the election. Conflict might arise at a time when there is a need for people to stand united.
But that's how it's done isn't it?
Create conflict, uncertainty, scare people into obediance?
Not only Greece but also Sweden elected a left wing government. The problem is that visions don't equal the ability to take charge and structure up a country.
Paying taxes might be acceptable as long as the taxpayers get a receipt on what the money has been used for and visible proof that they have done good.
All of Europe fight similar problems. Some countries are better at creating what seem to be solutions.
Various programs for covering up unemployment is one of them. Projects concerning immigration/integrational issues another.
It has never stopped surprising me how much work is put in by so many, creating so little.
It's a huge apparatus.
Maybe Europe's new focus, instead of punishing Greece, should be getting serious about solving issues of importance to people, normal people, the ones that now suffer under more and more taxes, yet fearing unemployment, their old age, getting sick, their children's future etc etc.
Transparancy considering the spending of tax money, fight against corruption and politicians willing to take on some responsibility.
Maybe we should make it a global project?

tragically, you support the most anti-democratic and atrocious government coalition in the history of Greece, between far-right neonazis and far-left socialists.

Apparently you are terribly misinformed about the anti-european and anti-us rhetoric from the government, and the level of paranoia in that rhetoric. The "Greek Democracy" that you write about is a joke; the referendum is an absolute joke as well. You would know all that if you spent some time to talk to a common sense Greek.

It is utterly disappointing that you fail to recognize that there are deep political issues at the moment (this new paranoiac form of nationalism), which are much more important than any economic figure.

Why is austerity only a problem for the Greeks? In Holland there have been rigorous cuts on public budget and on the public sector, the pension age has been changed from 65 to 67. So why should solidarity go one way?
Socialdemocrats all over Europe had high hopes of Tsipras executing a leftist policy: stimulating Greeks to pay taxes instead of evading them, making an end to privileged positions of shipowners etc. It seems he's only continuing making populist smoke screens instead to secure his own position.

Stiglitz's definition of democracy is a joke. Europeans have elected not to be in a transfer union and in spite of that Greece has gotten a lot of money.

Greeks can vote all they want but that doesn't put me, as the European taxpayer, under any moral obligation to send my money their way. The European people don't want to provide unlimited funding without strings attached to Greece and the (democratically elected) European leaders are listening to the wishes of their electorate.

Even though Stiglitz would wish otherwise, my vote counts too, because it affects my money and because this is about more than just Greece.

How did your tax money get sent to Greece? Is your country debt free? Which country in the EU has debt less than 50% of their GDP? All the credit is created out of thin air by IMF, ECB and the World Bank etc when the borrower signs underthe dotted line just as regular banks do when you sign for a mortgage. No need to believe anyone. Please ask your elected representative to explain to you how tax money ends in Greece when your own country is not debt free.

The hidden assumption Stiglitz makes is that a majority of the voters can somehow magically will into existence unlimited assets, far beyond what they produce, to pay debts they should never have incurred and to support consumption by the unproductive.
It is worth reading Frederick Bastiat (1849-1850). The Law http://constitution.org/cmt/bastiat/the_law.html which discusses the situation Greece and the world is in.

Ain't Socialism great? 350,000,000 unhappy people run by a club of professional politicians who stay in power by redistributing what is left of other people's money and by forcing compliance.
How did that line go? Neither a lender or borrower be? Everyone in Europe is a purposeful whore to the political elite.

Today we have the Greece running toward another battle kinds of referendum This is not the solution is not sustainable The only sustainable response to reduce its public dept will have to restructure the social security and tax and expenses and attract industry and the capital human Good Luck Greece

Now at last a Nobel laureate in economics has stated the obvious that most of the credit lent by IMF, World Bank and ECB never reaches the people of the debtor nation. It should now be investigated how these organisations can create so much credit out of thin air on whim to bind countries in ever expanding cycle of debt and for whom.

These organisations are not responsible to answer to citizents of any country. They do not own any productive business that creates anything tangible to be sold to make a profit. From where do they get their money to lend to others? All most all the counties are in heavy debt. They surely cannot suddenly deposit any real money to these organisations to give credit to countries like Greece.

Greece should just flatly refuse to pay any creditors unless they can come and prove in a court of law in Greece in front of a jury that the money they lent to Greece was real money and not credit created out of thin air.

The precedence is already established in a court of law in the USA in “the First National Bank of Montgomery v. Daly” case where the bank could not prove that they had lend the defender Mr. Jerome Daly any real money when he defaulted on his mortgage. That judgment was later overturned. But the bank at least had to admit in front of a jury that they did not have to have any real money to give credit to a borrower.

Let the ECB, IMF and World Bank etc explain how they get their money to lend in front of a jury in a country where citizens have to suffer the consequences of such lending programs.

Nice to see it underlined in the text: Tsipras was elected to "end austerity", not to get Greece out its structural problems. The Greek government has been trading reform promises against additional money since January. But what reforms were done?

Apparently Stiglitz doesn't believe democracy exists in in the other 18 members of the Eurozone. It's only a reality in Greece. German, French or Latvian count. And yes, it is not about the money but about forcing the Greeks to accept serious reform of their dysfunctional economic system.

Any moratorium, any debt restructuring will not be enough to consolidate the Greek economy unless the well-known and historically evolved clientelism is broken down. Shall it be addressed externally? It seems to be not, plus, since the EU integration has not proved to be a developmental integration: the homework has to be done in all member states. Let us add immediately what is often omitted from the discussions: governance always have to play a sort of pedagocial function as well to deal with the mind of citizens. Unfortunately, bailing a country out would not necessarily direct citizens’ mind and thus their behavior (including that of the public sector workers and politicians) towards pursuing more sustainable structures. See more: http://oliverkovacs.com/complexity-and-greece/

Dear Mr. Stiglitz,
I`m fully aware that you and some of your collegs discriminate and offend the German Nation and other European countries and people, who have tried to help Greece. The problems of Greece started long time ago and were enforced by Simitis and his followers up to Samarans.
The Germans and other northeuropean Countries have not forced the Greeks to increase their salaries by more than 30 % since 2004 (?), we have not asked the Greeks to avoid taxpayments etc.
The real problem is that the Greeks have an unfriendly attitude towards their own goverment and the cicvil service in total. We could go into the details.
The past has proven that it makes no sense to transfer money to Greece. They had already their financial support, more than 100 Millards of Euros before the financial crisis. What did they do with it?
We are not fighting their democracy as you claim so often. Please look into your country to explain me if your NSA activities are democratic or your camp in Guatanomo. Stopp to teach us about real democracy. Start to work at home or go to Greece to help those people to leave the deep vally of depression instead of telling always lies about our treatment of the Greek catastrophie.
By the way I would be interested to hear from you a real alternative how to solve the problem of Greek as a nation and their people.
Hans Joachim Breil

There's always this horrific 25% decline in GPD. But Greece got its high GPD on borrowed money. Before the crisis it had dramatic growth in GPD. So what is really needed is to see where Greece would have been when it had not borrowed too much. And then see the results of the austerity. Too my surprise it is hard to find such data.
According to Jeremy Bulow en Kenneth Rogoff "the creditor countries have been net givers of money rather than takers for most of the crisis".

I'm not sure if Professor Stiglitz has ever interviewed anyone who has tried to establish a new business in Greece, or if he has firsthand or secondhand knowledge of the workings of the entrenched Greek employed civil service bureaucracy. I am surprised that no mention is made of the history of embedded tax evasion within the Greek culture. Professor Stiglitz writes of Greece as if it were comparable to any other economic entity going through a tough time. As their history has proved going back to at least 1923 and before they have never had an economy that did not depend upon tourism, olive oil and wine and cheap textile exports.

Here we go again….. 48 hours before the January 2015 Greek elections, the ECB announces € 1Tr QE (Greece excluded of course). Today, 48 hours before the Greek Referendum, the IMF announces that Greece requires extra €50B + Debt Haircut and accusing the current Greek Government of spending it? How…..that is €10B a month, without bailout money and without a banking system? Are they serious..…. This is called robbery in broad daylight! Lagarde and Draghi must be sacked and humiliated. They are acting as politicians instead of independent central bankers. They have breached every rule on this planet.

Scenario 1: Yes Vote…….New Greek General Elections (6-8 months of uncertainty and no cash)…..SYRIZA Back in power with wider support.
Scenario 2: No Vote…….Fresh Negotiations…….No Agreement……. New Greek General Elections (after 12-16 months of uncertainty and no cash)……….SYRIZA Back In power with much wider support.
In the meantime, the Portuguese and Spanish elections would have taken place and the electorate seeing what they are currently witnessing will kiss good bye not only to the Euro but to the whole of the EU project.
Scenario 3: With a Yes or a No Vote, the EU/EZ is doomed;
Merkel and Schäuble have until this Saturday to “grow up” which is not possible either!

Here's a little piece that was written almost THREE YEARS ago that seems to answer all the angst by all the above and Sitglitz's question about what is really going on...http://bit.ly/1Jxk8zJ...and in a lot fewer words.

It's a pity people still bother to give any air time to this nonsense. I came here to read comments and see what type of level the discussion was in. The best i've read until today was Kenneth Rogoff open letter about Stiglitz https://www.imf.org/external/np/vc/2002/070202.htm

It's amazing people still fall for dogma lovers and misery prophets. Any young economist, from Greece, can tell you accurately what Greece needs to change and do to increase output and set its foot on the path to prosperity. Stiglitz will show you how the way to become the new Venezuela.

Why did the Greek bailout fail? The Greek bailout failed because IMF economists had been advising the EU officials based on a static analysis that took only economics into consideration. Whereas a dynamic interplay between law and economics has been going on all the while:

The treaties that constitute the European Union, that were signed into law, between 1950 and 2000, were based on the expectations and assurances provided by certain economic models. These economic models, that formed the foundation of capitalism in the 20th century, advocated balanced budgets among the member states, with specific limits on their budget deficits. Continuing these same expectations, when the Euro currency was designed and introduced in the late 90s, sound money policy was the basis for the economic models that were used for policy analysis. From there on, the EU institutions believed that they had codified these economic models into a legal framework through treaty obligations, rules and regulations binding the member states.

This legal framework is what the EU institutions adopt as the basis of their policies. They do not go by the preferences expressed by elected governments, nor do they allow for any changes in the economic models. Policies/treaties that were already committed by the member governments forms the basis of any discussions that these EU institutions undertake. Thus in the case of Greece, the baseline scenario that the so-called Troika [ECB, EC, IMF] would consider earlier commitments made by previous governments -- a steady state of 4.5% primary surplus, cuts in pensions, raising retirement ages, wage cuts, tax raises, etc. Any self-righteous protestations by the newly elected Syriza government that the GDP has contracted 25% since the time the austerity program began five years ago, would be acknowledged respectfully, but the Troika officials would not know what to do with that information. The economic models that were frozen into a legal framework between the 19 Eurozone countries does not deal with these situations. Starting with the baseline, the current phase of negotiations from February to June of 2015 would have only allowed for minor deviations from the baseline. Thus, the Greek government had little chance from the beginning.

However, the situation with the economic models changed drastically after the economic crisis of 2008. Following the unconventional monetary policy experiments tried by the Federal Reserve in America, the ECB realized that it would have to abandon its sound money policy. Instead, it would have to do QE. At this point, the institutional inertia of the Troika still did not allow for any recognition that the original economic models based on so-called market fundamentalism were proven terribly inadequate after the economic crisis of 2008.

As a result, even while all the goodies of QE that were obtained by unlimited money printing were to be shared among the EU Core countries, the Troika continued to insist on austerity for the peripheral countries. This post-2008 disconnect between law and economics ended up undermining the credibility of the Troika. This is the main reason why no matter how much the Greek government would have bought into the reform program proposed by the Troika, it would not have succeeded.

What is needed is leadership, that stops demanding blood from stone, not to save "creditors" as they are described, but reckless lenders. We know who they are. They played the game in the US by giving money willynilly to ANY home buyer to create the so-called "financial crisis" and the great recession that followed, with which much of America still lives.

This is only half the truth Mr. Stiglitz.
The problem with Greece has always been its public sector.
For many years the Greek political parties have been employing redundant civil servants. So now civil servants constitute a large part of the voters; or to use a more accurate expression something similar to the “clientes” of ancient Rome. Unlike Roman “clientes”, they do not have a steady “patron”. They move from one political party to the other depending on which party offers better promises… Promises being usually more money, less work, early retirement and other benefits.
The promises of Mr. Tsipras are presently more comfortable for them. Tomorrow it may be somebody else. Who knows, it may be the Nazi party (Golden Dawn).
On the other hand, the private sector in Greece has always been the cow. In view of the above reality, the cow has always been hiding part of its milk for the dark days to come. Tax evasion of the private sector has always been a necessity. It serves the survival of the cows and their calfs.
To make a long story short, neither the previous Greek governments nor the government of Mr. Tsipras were prepared to touch the privileges of the public sector. All discussions with the creditors always ended up with the Greek side proposing new taxes as alternatives to the reduction of public spending.
Unfortunately, the notorious troika didn’t insist to the reduction of public spending, to reforms of the public sector, to privatizations. It agreed to the increase of taxes. This was the worse mistake of the creditors. So the problem is that now the cow has no more milk. Some calfs were more lucky. Those which were well bred, left and went over to more civilized countries (favorably to your country) to find a decent work.
And now the Greek public sector has become a vampire. It just started to drink the cow’s blood. When there is no more blood left, we will enter the last phase: Cannibalism. We will start eating each other.
No doubt the story, -and honestly Mr. Stiglitz, this is just a part of the only sad, yet true story of Greece- , is coming to an end.

See also:

In the first year of his presidency, Donald Trump has consistently sold out the blue-collar, socially conservative whites who brought him to power, while pursuing policies to enrich his fellow plutocrats.

Sooner or later, Trump's core supporters will wake up to this fact, so it is worth asking how far he might go to keep them on his side.

A Saudi prince has been revealed to be the buyer of Leonardo da Vinci's "Salvator Mundi," for which he spent $450.3 million. Had he given the money to the poor, as the subject of the painting instructed another rich man, he could have restored eyesight to nine million people, or enabled 13 million families to grow 50% more food.

While many people believe that technological progress and job destruction are accelerating dramatically, there is no evidence of either trend. In reality, total factor productivity, the best summary measure of the pace of technical change, has been stagnating since 2005 in the US and across the advanced-country world.

The Bollywood film Padmavati has inspired heated debate, hysterical threats of violence, and a ban in four states governed by the ruling Bharatiya Janata Party – all before its release. The tolerance that once accompanied India’s remarkable diversity is wearing thin these days.

The Hungarian government has released the results of its "national consultation" on what it calls the "Soros Plan" to flood the country with Muslim migrants and refugees. But no such plan exists, only a taxpayer-funded propaganda campaign to help a corrupt administration deflect attention from its failure to fulfill Hungarians’ aspirations.

French President Emmanuel Macron wants European leaders to appoint a eurozone finance minister as a way to ensure the single currency's long-term viability. But would it work, and, more fundamentally, is it necessary?

The US decision to recognize Jerusalem as the capital of Israel comes in defiance of overwhelming global opposition. The message is clear: the Trump administration is determined to dictate the Israeli version of peace with the Palestinians, rather than to mediate an equitable agreement between the two sides.